# Appendix — Hughes Aircraft Co. v. United States

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Appendix
- **Published:** January 1, 1994
- **Citation:** 513 U.S. 987

## Text

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APPENDIX A

UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

No. 92-5068 1
D.C. No. CR-91-1022-WMB

United States Of America,
Plaintiff- Appellee,

V.
Hughes Aircraft Co., Inc.,
Defendant-Appellant.

APPEAL FROM THE UNITED STATES DISTRICT
COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA
WILLIAM MATTHEW BYRNE, JR.,
DISTRICT JUDGE, PRESIDING

Argued and Submitted December 6, 1993
Decided March 28, 1994
Amended April 28, 1994

Before: TANG, D.W. NELSON, and LEAVY, Circuit Judges
PER CURIAM

Per Curiam:

Hughes Aircraft Co., Inc. (“Hughes”) appeals from its
conviction and sentence for conspiring to defraud and make
false statements to the federal government. We affirm.

2a

FACTS AND PRIOR PROCEEDINGS

Hughes contracted with the United States to
manufacture microelectronic circuits, known as “hybrids,”
which are used as components in weapons defense systems.
The contracts required Hughes to perform a series of tests on
each hybrid. As the hybrids made their way through the testing
process, they were accompanied by paperwork indicating what
tests had been performed, the results of those tests, and the
identity of the operator of the testing equipment.

Hughes’s former employee, Donald LaRue (“LaRue”),
was a supervisor responsible for ensuring the accuracy of the
hybrid testing process. LaRue arranged for the paperwork to
indicate falsely that all tests had been performed and that each
hybrid had passed each test. When LaRue’s subordinates called
his actions to the attention of LaRue’s supervisors, the
supervisors did nothing about it. Instead, they responded that
LaRue’s decisions were his own and were not to be questioned
by his subordinates.

Hughes and LaRue were charged with one count of
conspiracy to defraud and make false statements to the United
States in violation of 18 U.S.C. § 371,' and two counts of
making false statements in furtherance of that conspiracy in
violation of 18 U.S.C. § 1001.2 LaRue was acquitted on all

1 “If two or more persons conspire either to commit any offense against the
United States, or to defraud the United States, or any agency thereof in any
manner or for any purpose, and one or more of such persons do_any act to
effect the object of the conspiracy, each shall be fined not more than $10,000
or imprisoned not more than five years, or both.

If, however, the offense, the commission of which is the object of the
conspiracy, is a misdemeanor only, the punishment for such conspiracy shall
not exceed the maximum punishment provided for such misdemeanor.”
18 U.S.C. § 371.

2 “Whoever, in any matter within the jurisdiction of any department or
agency of the United States knowingly and willfully falsifies, conceals or
(continued...)

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counts. Hughes was convicted of the conspiracy charge, but
acquitted of the other two charges.* Hughes appeals from both
its conviction and fine of $3.5 million.

ANALYSIS
I. CONVICTION
A. Standard of Review

Hughes raises several arguments in support of the
contention that its conviction under § 371 must be overturned
as a matter of law. Because these arguments present pure
questions of law, we review them de novo. See Anderson v.
United States, 966 F.2d 487, 489 (9th Cir. 1992).

B. Discussion
1. Inconsistent Verdicts

Hughes first argues that it must be acquitted as a matter
of law because the same jury that convicted Hughes acquitted
its “indispensable co-conspirator,” LaRue, of the identical
charges on identical evidence. Hughes bases its argument on
three Supreme Court cases from the 1930’s and 1940's

? (...continued)
covers up by any trick, scheme, or device a material fact, or makes any false,
fictitious or fraudulent statements or representations, or makes or uses any
false writing or document knowing the same to contain any false, fictitious or
fraudulent statement or entry, shall be fined not more than $10,000 or
imprisoned not more than five years, or both.” 18 U.S.C. § 1001.

> Hughes was charged with 50 additional counts of false statements to the
United States. These counts were severed and await resolution of this appeal.

‘ Those three cases do not support Hughes’s contention because none dealt
with inconsistent jury verdicts. In Hartzel v. United States, 322 U.S. 680
(1944), the trial court set aside the conviction of two of three co-conspirators.
The Court concluded “the setting aside of [the two co-conspirators’ ]
convictions makes it impossible to sustain petitioner's conviction upon the
basis of .. . the conspiracy count.” /d. at 682 n.3. In Morrison v. California,
291 U.S. 82 (1934), the Court found that the evidence was insufficient to

(continued...)

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arguing that they provide an exception to the general rule that
inconsistency of jury verdicts is not a ground for reversal. See
Dunn v. United States, 284 U.S. 390, 393 (1932); United
States v. Powell, 469 U.S. 57, 64-65 (1984). According to
Hughes, the post-Dunn Supreme Court cases indicate that the
‘nconsistent verdict rule applies only to situations involving
‘nconsistencies in multiple verdicts against a single defendant,
not inconsistencies in multiple verdicts against multiple
defendants. Controlling Ninth Circuit precedent precludes us
from adopting such a rule.

In United States v. Valles-Valencia, 811 F.2d 1232 (9th
Cir.), as amended by 823 F.2d 381 (1987), the defendant argued
that, because his sole co-conspirator was acquitted, his own
conviction for conspiracy was impossible as a matter of law.
Initially we agreed and stated “the acquittal of all but one of the
conspirators signifies that the jury found no agreement to act,
and the remaining conspirator cannot have {conspired with
himself] since ‘[cJonspiracy requires a plurality of actors... .””
811 F.2d at 1239 (quoting United States v. Wright, 742 F.2d
1215, 1224 (9th Cir. 1984)). In response to the subsequent
Supreme Court decision in Powell, however, we amended our
ruling, stating that

‘ (...continued)

support one of the co-conspirator’s convictions. Thus, the Court noted “[i]t
is impossible in the nature of things for a man to conspire with himself” and
ruled “t]he conviction failing as to the one defendant must fail as to the other.”
Id. at 92 & 93. Finally, in Gebardi v. United States, 287 U.S. 112 (1932), the
Court ordered an acquittal of a woman convicted of conspiring with a man to
violate the Mann Act (transporting a woman interstate for the purposes of
prostitution) because the evidence was insufficient to support her conviction.
The Court noted that under the Mann Act the woman's consent was not
criminal. Jd. at 123. Thus, her consent, without more, was insufficient
evidence to convict her of conspiracy to violate the Mann Act. Id. The Court
concluded “[a]s there was no proof that the man conspired with anyone else to
bring about the transportation, the convictions of both petitioners must be
[(rjeversed.” Jd.

Sa

[I]nconsistent verdicts can just as easily be the
result of jury lenity as a determination of the
facts. Thus, the acquittal of all conspirators but
one does not necessarily indicate that the jury
found no agreement to act. Moreover, the
Court has rejected a rule that would allow
criminal defendants to challenge inconsistent
verdicts on the ground that in their case the
verdict was not the product of lenity, but of
some error that worked against them. The fact
that the conflict in this case involves charges
against different defendants, rather than different
charges against the same defendant does not
affect the rationale.

823 F.2d at 381-82 (internal quotation and citation omitted).

The Supreme Court's decision in Powell supports this
extension of the application of the Dunn rule insulating
inconsistent jury verdicts from appellate review. “(T]he
Government’s inability to invoke review, the general reluctance
to inquire into the workings of the jury, and the possible
exercise of lenity—suggests that the best course to take is
simply to insulate jury verdicts from review on [inconsistency]
ground.” Powell, 469 U.S. at 68-69. Contrary to Hughes's
contentions, this Circuit has not recognized a post-Powell
exception to the Dunn rule.’ Accordingly, the conviction of one

> To support this contention, Hughes cites United States v. Hart, 963 F.2d
1278 (9th Cir. 1992), United States v. Guzman, 849 F.2d 447 (9th Cir.
1988); and United States v. Marchini, 797 F.2d 759 (9th Cir. 1986), cert.
denied, 479 U.S. 1085 (1987). Because each of these cases dealt with
inconsistent verdicts against single defendants, they are inapplicable to
Hughes’s contention that we have recognized an exception to Dunn for
inconsistent verdicts against multiple defendants. Moreover, each of these
three cases holds that inconsistent verdicts can stand, even in the presence of
a conviction that is rationally incompatible with an acquittal, provided
sufficient evidence exists to support a verdict of guilt. See Hart, 963 F.2d at

(continued...)

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co-conspirator is valid even when all the other co-conspirators
are acquitted.

2. Respondeat Superior

Hughes next argues that it is entitled to a judgment of
acquittal because the evidence against it and LaRue was
identical, yet one was convicted while the other was acquitted.°
This argument is predicated on the assumption that LaRue was
the sole employee for whose actions Hughes could be found
vicariously guilty and that the evidence against each of the two
defendants was necessarily identical. However, some of the
evidence of conspiracy was offered against Hughes alone.
Moreover, as this evidence indicates, the jury could have found
Hughes guilty based on the actions or omissions of its

5 (continued)
1281; Guzman, 849 F.2d at 448, Marchini, 797 F.2d at 765. Hughes does not
challenge the sufficiency of the evidence.
6 This argument is simply a variation of the inconsistent jury verdicts
contention set out in part 1, supra.

Hughes cites to United States v. Duz-Mor Diagnostic Labs, Inc.,
650 F.2d 223 (9th Cir. 1981), as support for this argument. In Duz-Mor the
trial court granted a motion to dismiss the indictment against the only
employee whose actions could have led to corporate vicarious liability, but
denied the corporate employer’s motion to dismiss. Jd. at 225. On appeal we
noted two exceptions to the general rule that inconsistencies in jury verdicts
rendered in the same proceeding do not require reversal.

The first exception involves “the inconsistent conviction of a
conspirator whose alleged co-conspirators have been acquitted.” Id.
However, this exception to Dunn was overruied in Powell, 469 U.S. at 64-65
(“{W]here truly inconsistent verdicts have been reached, ‘[t]he most that can
be said . . . is that the verdict shows that either in the acquittal or the conviction
the jury did not speak their real conclusions, but that does not show that they
were not convinced of the defendant's guilt” (quoting Dunn, 284 US. at
393)). The second exception, which applies to “inconsistent multiple
convictions, where the defendant could be guilty of either, but not both,
charged offenses[,]” id. at 226 n.3, is clearly irrelevant to the facts of the
instant appeal.

Moreover, Duz-Mor involved a bench trial, to which the Powell
rationale does not apply.

Ta

supervisors and employees other than LaRue. As Hughes’s
assumption that the facts against both defendants were identical
is erroneous, and no other facts support its argument, we reject
this contention.

3. Statutory Construction

Hughes’s third argument is that the plain language of
18 U.S.C. § 371, which states that if “two or more persons
conspire . . . each” may be punished, prevents its conviction
because it is legally impossible for a party to conspire with itself.
Hughes argues that, because it is vicariously liable for each of
its employees, a conspiracy between employees would
necessitate a finding that Hughes conspired with itself. We
reject this creative construction. The statutory language does
not exclude criminal liability for a corporation simply because
its employees are the actual conspirators. To rule otherwise
would effectively insulate all corporations from liability for
conspiracies involving only employees acting on behalf of that
corporation. We hold that a corporate may be liable under
§ 371 for conspiracies entered into by its agents and employees.
See United States v. Peters, 732 F.2d 1004, 1008 (1st Cir.
1984).

Nonetheless, Hughes argues that the statute is
ambiguous and that the rule of lenity compels a reversal of its
conviction. See United States v. LeCoe, 936 F.2d 398, 402 (9th
Cir. 1991). However, the Supreme Court recently explained
that “[t]his maxim of statutory construction . . . cannot dictate
an implausible interpretation of a statute, nor one at odds with
the generally accepted contemporary meaning of a term.”
Taylor v. United States, 495 U.S. 575, 596 (1990). Moreover,
the rule of lenity is not “‘to be used in complete disregard of the
purpose of the legislature.”” Perrin v. United States, 444 U.S.
37, 49 n.13 (1979) (quoting United States v. Culbert, 435 U.S.
371, 379 (1978)). Because the interpretation offered by Hughes
is implausible and would undermine the purpose of the statute,
we reject it.

8a

4. The Intracorporate Conspiracy Doctrine In Antitrust Law

Hughes also contends that we should extend the reach
of the intracorporate conspiracy doctrine in antitrust law, which
holds that a conspiracy requires “an agreement among two or
more persons or distinct business entities.” Calculators Hawaii,
Inc. v. Brandt Inc., 724 F.2d 1332, 1336 (9th Cir. 1983). See
also Copperweld Corp. v. Independence Tube Corp., 467 US.
752 (1984); Harvey v. Fearless Farris Wholesale Inc., 589 F.2d
451, 455 (9th Cir. 1979). While this doctrine has been extended
by some circuits to civil rights cases, see e.g. Buschi v. Kirven,
775 F.2d 1240, 1251 (4th Cir. 1985); Dombrowski v. Dowling,
459 F.2d 190, 196 (7th Cir. 1972), other circuits have declined
to do so, see e.g. Dussouy v. Gulf Coast Invest. Corp.,
660 F.2d 594, 603 (Sth Cir. 1981), and we have reserved the
issue. See Portman v. County of Santa Clara, 995 F.2d 898,
910 (9th Cir. 1993) (listing cases).

However, this doctrine has never been applied to
criminal cases. As the First Circuit noted, “There is a world of
difference between invoking the fiction of corporate personality
to subject a corporation to civil liability for acts of its agents
and invoking it to shield a corporation or its agents from
criminal liability where its agents acted on its behalf.” Peters,
732 F 2d at 1008 n.7. Every other circuit to address the issue
has come to the same conclusion. See United States v. Ames
Sintering Co., 927 F.2d 232, 236 (6th Cir. 1990); United
States v. Stevens, 909 F.2d 431, 432 (11th Cir. 1990), United
States v. Hughes Chalmers Chevrolet-Toyota, Inc., 800 F.2d
737, 738 (8th Cir. 1986); Dussouy, 660 F.2d at 603.

Hughes argues that public policy requires us to apply the
intracorporate conspiracy doctrine to criminal cases. However,
a stronger public policy mandates a contrary result. Simply
because no other corporation or individual is involved, or there
is no joining of previously divergent goals, does not mean there
is no conspiracy. If we applied the intracorporate conspiracy
doctrine to this case, no corporation acting on its own behalf by

9a

and through its employees could be found guilty of conspiracy.
This result is illogical.

We decline to extend the intracorporate conspiracy
doctrine to criminal activity.

5. Wharton’s Rule

Wharton’s Rule prevents a conspiracy conviction when
an underlying substantive offense requires more than one actor,
such as adultery or dueling, and in which “the immediate
consequences of the crime rest on the parties themselves rather
than on society.” Jannelli v. United States, 420 U.S. 770,
782-83 (1975). Here we have a conspiracy to defraud the
government, a violation of 18 U.S.C. § 1001.

Hughes argues that a corporation could only violate
18 U.S.C. § 1001 through the efforts of at least two of its
employees due to the supervisory and reporting structure of a
corporation. Of course, that is not true: a corporation could be
liable under § 1001 for false statements to the government by
just one of its employees. A conspiracy arises when more than
one of its employees agree to defraud the government.

Moreover, the consequences of government fraud
certainly do not rest on the parties themselves rather than
society. Government fraud has an adverse effect on the
government treasury, the quality of government projects, and in
cases such as this one, the safety of individuals utilizing the
government goods purchased.

This argument is rejected.

Because we find no merit to any of Hughes’s arguments
on this point, we affirm the conviction.

Il. SENTENCING
A. Standard Of Review

We review de novo the legality of a sentence, United
States v. Heim, 15 F.3d 830, 831 (9th Cir. Jan. 24, 1994), while
we examine the district court’s factual determinations

:

10a

underlying that sentence for clear error. United States v.
Mainard, 5 F.3d 404, 405 (9th Cir. 1993).

B. Discussion
1. Findings Under Federal Rule of Criminal Procedure 32

Hughes first contends that, because there was a dispute
regarding the amount of the fine to be imposed, the district
court was required to make w="tten findings under Federal Rule
of Criminal Procedure 32(c )3)(D). The Rule provides that
when a defendant “allege{s] any factual inaccuracy in the
presentence investigation report . . . the court shall, as to each
matter controverted, either make (i) a finding as to the
allegation or (ii) . . . [state that] the matter controverted will not

be taken into account in sentencing.” Fed. R. Crim.
P. 32(c)(3)(D).

Here, the dispute did not concern any factual matter in
the presentence report, but rather a contention made by the
government in its sentencing memorandum. Thus, no written
factual findings were required, and Rule 32(c)(3)(D) does not
apply. See United States v. Rachels, 820 F.2d 325, 327 (9th
Cir. 1987). Moreover, Hughes failed to object to the fact that
the presentence report did not address the loss to the
government and has thus waived any claim that the presentence
report was not properly completed.

2 Calculation Of Fine

Hughes also contends that the district court improperly
calculated the amount of its fine in several ways. The
alternative fines provision permits a sentencing court to fine a
defendant “not more than the greater of twice the gross gain or
twice the gross loss” caused by the crime. Former 18 U.S.C.
§ 3623(c)(1).’ This section does not require specific findings of

7 “Tf the defendant derives pecuniary gain from the offense, or if the offense
results in pecuniary loss to another person, the defendant may be fined not
(continued...)

lla

the exact loss. Thus, the only question before us is whether the
district court made sufficient findings on the record that the loss
to the government was at least one half of $3.5 million, or
$1.75 million.

In its sentencing memorandum, the government
acknowledged that the exact amount of its losses in this case
would be impossible to calculate. However, it offered two
alternative bases for calculating its pecuniary loss, which
provided the court with an adequate foundation for its
$3.5 million assessment. The district court made the following
finding:

The other factor in the fine is how much
can you precisely calculate? How precise must
you be? . . . I think the test can probably be by
a preponderance of the evidence. How do you
calculate the loss? While the government has
made a good faith effort to present some data
along with declarations of memorandums from
various people, it is hard to be precise and I
think the government concedes that is difficult
for them to be precise on what its loss is. I
think there was some loss. I can't be any more
precise to the exact loss than can the
government in its presentation.

[SER 151.] Under the government’s calculations, which
Hughes has not shown are incorrect, the court could have fined
Hughes anywhere from $17.6 million to $984 million. Although
the district court's findings were vague, they were sufficiently
supported to uphoid the fine imposed.

7 (...continued)
more than the greater of twice the gross gain or twice the gross loss, unless
imposition of a fine under this subsection would unduly complicate or prolong
the sentencing process.” 18 U.S.C. § 3623(c)(1) (repealed).

12a

Hughes also argues that the district court erroneously
based the fine on the cost of this prosecution. Hughes bases its
claim on the district court’s comments:

Again, I guess one of the factors that
might be considered in appropriateness of the
fine is how much money it cost the government
to bring this action. I don’t have that figure, but
I know it is in the millions to bring this action,
but that cannot be the sole basis of the fine.

[SER 158.] The last phrase clarifies that the district court did
not in fact base the fine on the costs of prosecution, and it is
unnecessary to address Hughes's arguments that it lacked notice
of or the opportunity to dispute the prosecution costs in
violation of its due process rights, and that this burdened its
right to plead not guilty.

Hughes finally argues that the government is not a
“person” under 18 U.S.C. § 3623 because “person” is defined
under 1 U.S.C. § 1 as including only “corporations, companies,
associations, firms, partnerships, societies, and joint stock
companies, as well as individuals.” However, this statutory
definition of “person” is not an exhaustive list: Section |
provides simply that “person” includes the above. We hold that
the government is a “person” under 18 U.S.C. § 3623.

The sentence imposed by the district court was not an
abuse of discretion.

CONCLUSION
The conviction and sentence are AFFIRMED.

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APPENDIX B
[Filed May 13, 1994]

UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

No. 92-5068 1
D.C. No. CR-91-1022-WMB

United States Of America,
Plaintiff-Appellee,

V.
Hughes Aircraft Co., Inc.,
Defendant-Appellant.

ORDER
Before: TANG, D.W. NELSON, and LEAVY, Circuit Judges.

The panel has voted to deny the petition for rehearing.
Judges D.W. Nelson and Leavy have voted to reject the
suggestions for rehearing en banc, and Judge Tang has so
recommended.

_ The full court has been advised of the en banc
suggestion and no judge of the court has requested a vote on it.

The petition for rehearing is DENIED and the
suggestion for rehearing en banc is REJECTED.

l4a

APPENDIX C
[Filed September 8, 1992]

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Criminal No. 91-1022 WMB

United States Of America,
Plaintiff,
V.
Hughes Aircraft Co., Inc. and Donald Anthony LaRue,
Defendants.

ORDER DENYING MOTION FOR
JUDGMENT OF ACQUITTAL OR NEW TRIAL

L Background.

Defendant Hughes Aircraft Co., Inc. (“Hughes”) and
defendant Donald LaRue, a former Hughes employee, were
charged with conspiracy to defraud the United States in
violation of 18 U.S.C. §§ 371 and 1001. During the trial,
Hughes, the government and the Court agreed that Hughes
could be guilty of conspiracy only if LaRue was found to have
conspired with one of four unindicted Hughes employees.
14 Trans. p. 69, lines 14-25 (6/9/92). The jury was so
instructed. Court’s Instructions to the Jury, p. 11 lines 10-13.
Despite these instructions and a paucity of evidence at trial
supporting any other theory of Hughes’ culpability, the jury
acquitted LaRue and convicted Hughes. Before the Court is

lSa

Hughes’ motion for judgment of acquittal under
F.R.Crim.P. 29(c), and, in the alternative, for a new trial under
F.R.Cnim.P. 33.

Acknowledging the impropriety of speculation about or
inquiry into the jury’s reasoning, United States v. Powell,
469 U.S. 57, 66-67, 105 S.Ct. 471 (1984), Hughes offers three
bases for its motion. First, Hughes argues in the wake of
LaRue’s acquittal that the vicarious nature of Hughes’ criminal
liability distinguishes this case from the line of authority
insulating inconsistency in criminal verdicts from judicial review.
Second, defendant argues that in the Ninth Circuit and on the"
facts of this case, the so-called “rule of consistency” (requiring
acquittal of an alleged conspirator in a joint conspiracy trial
where the other defendants have been acquitted) survives that
same line of authority. Third, defendant argues that without
regard to LaRue’s acquittal, the evidence supporting Hughes’
conviction is legally insufficient. Alternatively, defendant moves
for a new trial.

Il. The Motion For Judgment Of Acquittal.
A. United States v. Powell and the Dunn Rule.

In Dunn v. United States, 52 S.Ct. 189 (1932), the
Supreme Court held that a criminal defendant convicted by a
jury on one count could not attack that conviction simply
because it was inconsistent with the jury’s verdict on another
count.’ The Court stated that “[c]onsistency in the verdict is
not necessary,” relying in part on a now inapplicable argument
that had the counts been presented in separate indictments, an
acquittal on one would not have had res judicata effect as to
another. The Court also quoted Steckler v. United States,
7 F.2d 59, 60 (2nd Cir. 1925), as follows:

' In Dunn the defendant had been convicted of maintaining a common
nuisance by keeping intoxicating liquor for sale at a specified place, but had
been acquitted of unlawful possession and unlawful sale of such liquor.

16a

The most that can be said in such cases is that
the verdict shows that either in the acquittal or
the conviction the jury did not speak their real
conclusions, but that does not show that they
were not convinced of the defendant’s guilt.
We interpret the acquittal as no more that their
assumption of a power which they had not the
right to exercise, but to which they were
disposed through lenity.

52 S.Ct. at 190.

The Dunn rule was later invoked by the Supreme Court
in the context of corporate criminal liability. In United States v.
Dotterweich, 64 S.Ct. 134 (1943), Dotterweich was found
guilty of shipping misbranded drugs in interstate commerce and
of shipping an adulterated drug, but the corporation of which he
was president and general manager was not convicted.
Dotterweich argued that having failed to find the corporation
guilty, the jury could not find him guilty. Citing Dunn, the
Court held as follows:

{w]hether the jury’s verdict was the result of
carelessness or compromise or a belief that the
responsible individual should suffer the penalty
instead of merely increasing, as it were, the cost
of running the business of the corporation, is
immaterial. Juries may indulge in precisely such
motives or vagaries.

65 S.Ct. at 135.

The Dunn rule was reinforced more recently in United
States v. Powell, 105 S.Ct. 471 (1984). Powell had been
convicted of three compound offenses of using the telephone in
“committing and in causing and facilitating” certain felonies, but
she had been acquitted of two counts—conspiracy to possess
cocaine with intent to distribute, and possession of cocaine with
intent to distribute—proof of which was an element of the
telephone facilitation counts. On appeal, the Ninth Circuit held

17a

that an exception to Dunn obtains where the defendant is
convicted under 21 U.S.C. § 843(b) (telephone facilitation) but
acquitted of the underlying felony. 719 F.2d 1480 (9th Cir.
1983). The Supreme Court reversed, reaffirming the Dunn rule
and taking issue with a number of circuit decisions which had
carved out exceptions to it. 105 S.Ct. at 476. The Court stated
that “the Dunn rule rests on a sound rationale that is
independent of its theories of res judicata...” 105 S.Ct. at 476.
Noting that the Double Jeopardy Clause prevents the
government from appealing an inconsistent acquittal, the Court
further stated:

fiJnconsistent verdicts ... present a situation
where “error,” in the sense that the jury has not
followed the court’s instructions, most certainly
has occurred, but it is unclear whose ox has
been gored. Given this uncertainty, and the fact
the Government is precluded from challenging
the acquittal, it is hardly satisfactory to allow the
defendant to receive a new trial on the
conviction as a matter of course. Harris v.
Rivera ... indicates that nothing in the
Constitution- would require such a protection,
and we therefore address the problem only
under our supervisory powers over the federal
criminal process. For us, the possibility that the
inconsistent verdicts may favor the criminal
defendant as well as the Government militates
against review of such convictions at the
defendant’s behest.

? In Harris v. Rivera, 102 S.Ct. 460 (1981), the Supreme Court held that a
defendant could not obtain relief by wnt of habeas corpus on the basis of
inconsistent verdicts rendered after a state bench trial. The Court confirmed

“the unreviewable power of a jury to return a verdict of not guilty for
impermissible reasons.” 102 S.Ct. at 464.

18a

Id. at 477 (footnote added). The Court further remarked that
“(t]he fact that inconsistency may be the result of lenity, coupled
with the Government’s inability to invoke review, suggests that
inconsistent verdicts should not be reviewable.” Id. (Footnote
omitted).

The Supreme Court in Powell confirmed the
applicability of the Dunn rule even where the jury ignores the
Court’s explicit instructions. Rejecting Powell’s argument that
the inconsistent verdict necessitated a finding of insufficient
evidence, the Court noted that whether approached on a
sufficiency of the evidence theory or on a collateral estoppel
type theory, the problem remains “that the same jury reached
inconsistent results....”? The Court added:

[t]his problem is not altered when the trial judge
instructs the jury that it must find the defendant
guilty of the predicate offense to convict on the
compound offense. Although such an
instruction might indicate that the counts are no
longer independent, if inconsistent verdicts are
nevertheless reached those verdicts still are
likely to be the result of mistake, or lenity, and
therefore are subject to the Dunn rationale.

Id. at 478-79.

Powell appears to countenance no exceptions to the
Dunn tule. After pointing to the protection afforded criminal
defendants by trial and appellate court review of the sufficiency
of the evidence, the Court stated that “[w]e do not believe that
further safeguards against jury irrationality are necessary.” /d.
at 478. Nothing that “[t]he rule established in Dunn v. United
States has stood without exception in this Court for 53 years...,”

3 The Powell Court stated that in such a situation, “principles of collateral
estoppel—which are predicated on the assumption that the jury acted rationally
and found certain facts in reaching its verdict—are no longer useful.” /d. at
478.

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the Powell court concluded by stating that “[i]f it is to remain
that way, and we think it should, the judgment of the Court of
Appeals must be [reversed].” /d. at 479.

Hughes provides the Court no persuasive justification
for taking this case outside Powell’s conclusion that “the best
course to take is simply to insulate jury verdicts from review”
on the ground that the jury reached inconsistent results. See
105 S.Ct. at 479.

B. Hughes’ Argument Based On Inherent Limitations
Of Corporate Criminal Liablity.

Hughes seeks to avoid Powell altogether by asking the
Court to establish logical limits on the vicarious criminal liability
of corporations. Hughes admits that it has found no cases
circumscribing the attribution theory underlying corporate
criminal liability in the context of an inconsistent verdict. The
cases, according to Hughes, have instead focused on the
sufficiency of evidence against a convicted corporation where
individual agents were acquitted, finding that such inconsistency
does not by itself render the evidence against the corporation
insufficient. See United States v. Hilton Hotels Corp., 467 F.2d
1000, 1008 (9th Cir. 1972) (despite employee’s acquittal,
evidence connecting employee with conspiracy to violate the
Sherman Act could be considered as against employer
corporation in testing the sufficiency of evidence supporting
conviction of employer).

Hughes thus directs the Court to City of Los Angeles v. |
Heller, 106 S.Ct. 1571 (1986), which it argues offers support
for the imposition of logical and legal limits on vicarious
liability. Heller was a civil rights action brought under
42 U.S.C. § 1983 against the City of Los Angeles, individual
members of the city’s police commission, and two police
officers. The plaintiff contended that the officers had arrested
him without probable cause and had used excessive force. One
of the officers prevailed on summary judgment. The court
bifurcated the action, severing the claims brought under

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Monell v. Dept. of Soc. Serv. of City of N.Y., 98 S.Ct. 2018
(1978), and trying the claims against the remaining police
officer. The jury, which had not been instructed on any
affirmative defenses such as qualified immunity, returned a
verdict for the officer. The District Court subsequently
dismissed the Monell claims on the grounds that exoneration of
the officer precluded liability on the part of the city or the
commissioners. The Ninth Circuit reversed the dismissal of the
Monell claims on-the grounds that the verdict did not
necessarily negate the existence of a constitutional injury, but
might instead have been based on a belief that the officer was
entitled to a good faith defense. 106 S.Ct. at 1572.

The Supreme Court, in a per curiam opinion, agreed
with the district court and reversed the Ninth Circuit holding.
The Court noted the lack of any instruction on affirmative
defenses and stated that juries must be assumed not to base their
decisions on legal questions with respect to which they have not
been charged. /d. at 1573. The Court observed that the city
and the commissioners “were sued only because they were
thought legally responsible for [the officers’] actions” and
remarked that “if the latter inflicted no constitutional injury on
respondent, it is inconceivable that [the city and police
commissioners] could be liable to respondent.” Jd. The Court
thus concluded that because it had been determined that the
claimant suffered no constitutional injury, the claimant would
not be able to establish the damages element of the Monell
claims. /d.

Hughes suggests that He//er turns on the consequences
of a vicarious liability theory, and that it should not be
distinguished merely as a civil case not subject to the rule
permitting inconsistent verdicts in criminal cases. Hughes goes
so far as to suggest that the Heller majority must have
considered and rejected an inconsistent verdict analysis because
such an approach was explicitly taken up by Justice Stevens’
dissent. See id. at 1576. The government argues persuasively
that Heller is distinguishable as a civil case and further notes the

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dissent’s recognition that “[iJn a criminal case, a jury’s
apparently inconsistent verdict is allowed to stand...,” but that
“fi]n a civil case, the rule is less clear.” Jd.

Even putting the distinction between civil and criminal
cases aside, Heller offers little support for Hughes’ argument.
Hughes attempts to draw an analogy between the vicarious
liability assigned to a municipality in a civil rights action and the
vicarious liability imputed to a corporation through its
employee, arguing through Heller that the general tolerance of
inconsistent verdicts in criminal cases should be restricted in-
vicarious liability situations. Heller did not, however, present
a vicarious liability situation. Despite the Supreme Court’s
observation that the city and police commissions “were sued
only because they were thought legally responsible for” the
police officers’ actions, 106 §.Ct. at 1573, municipal liability
under Monell would not have beer imputed to the city through
its employment of the police officers. Monell, 98 S.Ct. at
2036-38. Rather, if found liable, the city would have been
directly liable for damage caused by its own custom or policy.
Id. The Heller Court based its holding on the plaintiff's failure
to establish an element of the Monell cause of action
(constitutional injury), and not on any circumscription of
attributed liability. The Monell imputation truly analogous to
corporate criminal liability is that which assigns a municipality
liability for the actions of its policymakers. In Heller, of course,
the claims against the police commissioners had been severed
along with the claims against the city, and imputation of the
commissioners’ actions to the city had not yet been put in issue.

The government, in support of the viability of corporate
criminal liability under the circumstances of this case, directs the
Court to United States v. Cargo Service Stations, Inc.,
657 F.2d 676 (Sth Cir. 1981). That case involved the
prosecution of a number of corporations and individuals for a
criminal conspiracy to fix prices in violation of the Sherman
Act. Citing Supreme Court and Fifth Circuit authority for the
permissibility of inconsistent verdicts, the Fifth Circuit rejected

22a

the appellant corporations’ argument that they were entitled to
a judgment notwithstanding the verdict because “every person
who could have acted as their agent has been acquitted of
criminal wrongdoing.” Jd. at 685.

Hughes argues that Cargo Services is merely one more
“inconsistent verdict” case and attempts to pierce the
appellants’ representation—unchallenged by the Cargo Services
court—that every person who could have acted as their agent
had been acquitted. Hughes points out that while five
corporations appealed the verdict, only three individuals had
been acquitted, suggesting that other possible agents must have
been involved in the alleged conspiracy.’ Toward the same end,
Hughes points out that nineteen current or former employees of
the indicted companies testified to price-fixing conduct. These
arguments by Hughes amount to pure speculation. The Cargo
Services court clearly accepted the appellants’ representation at
face value and felt the substantial authority supporting
inconsistent verdicts in criminal cases to be sufficient to uphold
a corporation’s conviction in the face of its only agent’s
acquittal. The government takes precisely this position in the
instant case.

Hughes provides no authority supporting its assertion
that in light of LaRue’s acquittal, Hughes’ conviction “gives the
corporate agent fiction a weight it simply cannot bear.”
Braswell v. United States, 487 U.S. 99, 128 (1988) (Kennedy,
J., dissenting). In consequence, the Court sees no reason to
distinguish inconsistent verdicts in the context of corporate
criminal liability from inconsistent verdicts in other kinds of
criminal cases.

« It is of course possible that an individual defendant acted as an agent for
more than one of the corporate defendants. At least two of the five corporate
appellants, Cargo Gasoline Company and Cargo Service Stations, Inc., appear
to have been related. See 657 F.2d at 678.

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B. Hughes’ Argument For Application
Of The “Rule Of Consistency.”

Despite the encompassing reasoning of Powell, Hughes
attempts to invoke the traditional rule rejecting conviction of an
alleged conspirator where all his alleged coconspirators have
been acquitted. See Hartzel v. United States, 64 S.Ct. 1233,
1234 n.3 (1944). Prior to Powell, the Ninth Circuit articulated
and circumscribed this so-called “rule of consistency” in United
States v. Patterson, 678 F.2d 774 (9th Cir. 1982), as follows:

acquittal of all but one of the alleged
conspirators requires acquittal of the remaining
defendant. [Citation omitted.] However, if an
indictment refers to unknown persons as
coconspirators and the government supplies
evidence to support a charge that the defendant
conspired with the unknown persons, a
conspiracy conviction will stand even if all other
named defendants are acquitted.

678 F.2d at 781, citing Lubin v. United States, 313 F.2d 419,
423 (9th Cir. 1963). The government maintains that the “rule
of consistency” was repudiated in U.S. v. Valles-Valencia,
823 F.2d 381 (9th Cir. 1987). Alternatively, the government
argues, the evidence that unindicted Hughes employees
participated in the conspiracy removes this case from the “rule
of consistency.” Hughes seizes on certain ambiguous language
in Valles-Valencia to argue that on the narrow facts of this
case, Patterson’s “rule of consistency” survives and commands

Hughes’ acquittal. Hughes’ position is without merit.

The Ninth Circuit’s original opinion in Vailles-Valencia,
at 811 F.2d 1232 (9th Cir. 1987), applied the “rule of
consistency” to vacate the conviction of one defendant where
the other alleged conspirators had been acquitted of that charge
(four by the Court and two by the jury.) The government
successfully petitioned for rehearing. In its second opinion, the
Ninth Circuit acknowledged that in Powell the Supreme Court

24a

“has rejected ‘a rule that would allow criminal defendants to
challenge inconsistent verdicts on the ground that in their case
the verdict was not the product of lenity, but of some error that
worked against them.”” /d., quoting Powell, 105 S.Ct. at 478.
The Ninth Circuit stated that the rationale of Powell applies not
just to cases involving multiple charges against the same
defendant, but also to those which, like the case presently
before the Court, involve charges against different defendants.
823 F.2d at 382.

As the government suggests, Valles-Valencia is most
reasonably read simply to repudiate the “rule of consistency” in
favor of reliance solely on a review of the sufficiency of the
evidence supporting conviction. Hughes nonetheless seizes on
certain ambiguities emphasized in the following passage from
the opinion to argue that a sliver of the doctrine remains
effective:

[w]e now reconsider the “rule of consistency” in
light of the Supreme Court’s recent holding in
Powell. Because of the Powell decision, the
broad language from Lubin to the effect that the
acquittal of all but one of the alleged
co-conspirators requires the acquittal of the
remaining defenda’’ can no longer be relied
upon. Each case must be examined carefully to
see whether evidence of conspiring with others,
known or unknown, was produced during the
trial. Our earlier cases relying on the broad
language must be deemed overruled im part by
the Supreme Court’s decision in Powell.

As the government points out in its
petition for rehearing and suggestion for
rehearing en banc, there was evidence that there
were unindicted co-conspirators and indicted
co-conspirators who were acquitted. The jury
verdicts indicated that the jury knew how to
acquit those whose guilt was not proved beyond

25a

a reasonable doubt and knew how to convict
those whose guilt was satisfactorily proven.

Id. (Emphasis added.) Hughes argues that Valles-Valencia
confirms the continuing validity of the Ninth Circuit’s earlier
holding in Patterson, supra, requiring the Court to carefully
examine the record to see if there was sufficient proof of a
conspiracy between the defendant and someone other than his
acquitted co-defendant(s). Based on the Valles-Valencia
court’s statement that the jury “knew how to acquit” some and
“knew how to convict” others, Hughes argues that the court
took into account evidence against “indicted co-conspirators
who were acquitted” by the court, but not evidence concerning
the two who were acquitted by the jury. Specifically, Hughes
argues that the second Valles-Valencia opinion amounts to a
reversal of the panel’s previous conclusion that the district
court’s judgment of acquittal in favor of certain defendants
precluded the appellate court from consideration of evidence
concerning those defendants in evaluating the sufficiency of
evidence against the remaining alleged conspirator. Hughes
accordingly argues that because LaRue was acquitted by a jury,
this Court can sustain Hughes’ conviction only if there was
sufficient evidence of a conspiracy among Hughes agents other
than LaRue.

Hughes’ suggestion that the Valles-Valencia court
would leave this purported distinction between judge-acquitted
and jury-acquitted defendants either entirely implicit or, at best,
referenced in the most oblique fashion, is untenable. Moreover,
Hughes’ proffered interpretation flies in the face of Powell, the
encompassing nature of which was recently noted by the Ninth
Circuit in United States v. Hart, 92 Daily Journal D.A.R. 6186
(9th Cir. 1992). A far more reasonable reading of
Valles-Valencia is that it merely affirms the need to examine the
sufficiency of the evidence that the convicted defendant was
party to an illegal agreement. Cases relying on Lubin were
overruled “in part” because those cases likely resolved issues
unrelated to the “rule of consistency.” The “rule of

26a

consistency” no longer exists apart from a requirement that
there be sufficient evidence of an agreement between the
convicted party and some other person.

Hughes cannot win a judgment of acquittal though
reliance on the “rule of consistency” as circumscribed by
Patterson.

C. Hughes’ Argument That The Evidence
Against It Is Insufficient.

Hughes’ final argument for judgment of acquittal is that
the evidence adduced at trial was insufficient under
F R Civ [sic]P. 29. The test for review of the sufficiency of the
evidence to support a criminal conviction is “whether, after
viewing the evidence in the light most favorable to the
prosecution, any rational trier of fact could have found the
essential elements of the crime beyond a reasonable doubt.”
Jackson v. Virginia, 99 S.Ct. 2781, 2789 (1979) (emphasis
original). Noting that this criterion “impinges upon ‘jury’
discretion only to the extent necessary to guarantee the
fundamental protection of due process of law...,” id., the
Jackson Court observed that “(t]he question whether the
evidence is constitutionally sufficient is of course wholly
unrelated to the question of how rationally the verdict was
actually reached.” /d. at n.13. Furthermore, the reviewing
court is to respect the province of the jury to determine the
credibility of witnesses, to resolve evidentiary conflicts, and to
draw reasonable inferences from proven facts by assuming that
the jury resolved all such matters in a manner supporting the
verdict. U.S. v. Orozco-Santillan, 903 F.2d 1262 (9th Cir.
1990).

Hughes itself acknowledges that “in assessing the
sufficiency of the evidence against a convicted corporation, a
reviewing court may affirmatively consider the conduct of an
acquitted agent.” Defendants’ motion, p. 7 lines 17-21, citing
United States v. Hilton Hotels Corp., supra, 467 F.2d at 1008.
In assessing the evidence against Hughes, LaRue’s acquittal

27a

must be disregarded, and evidence of his participation in the
alleged conspiracy must be considered.

Because the evidence supporting Hughes’ culpability as
defined by the jury instructions surpassed the Jackson v.
Virginia standard, Hughes may not be granted judgment of
acquittal based on insufficiency of evidence.

D. Hughes’ Motion In The Alternative For A New Trial.

Hughes makes its F.R.Civ.[sic]P. 33 motion for a new
trial on the same bases as its Rule 29 motion for judgment of
acquittal, but notes that the motion for new trial affords the
Court greater latitude in reviewing the evidence. As explained
by Wright:

[o]n a motion for judgment of acquittal, the
court is required to approach the evidence from
a standpoint most favorable to the government,
and to assume the truth of the evidence offered
by the prosecution. If on this basis there is
substantial evidence justifying an inference of
guilt, the motion for acquittal must be denied.

On a motion for new trial, however, the
power of the court is much broader. It may
weigh the evidence and consider the credibility
of witnesses. If the court reaches the conclusion
that the verdict is contrary to the weight of the
evidence and that a miscarriage of justice may
have resulted, the verdict may be set aside and
a new trial granted.

Wright, Federal Practice and Procedure: Criminal 2d §553.
The Ninth Circuit has stated that a motion for a new tral
“should be granted ‘only in exceptional cases in which the
evidence preponderates heavily against the verdict.” United
States v. Pimentel, 654 F.2d 538, 545 (9th Cir. 1981), citing
Wright at §553.

28a

Because it cannot be said that the evidence
“preponderates heavily” against Hughes’ conviction, the motion
for a new trial is denied.

Il. Conclusion.

Under Powell, supra, the jury’s verdict, despite its stark
inconsistency, is simply beyond the review of this Court except
as to the sufficiency of the evidence. The evidence supporting
Hughes’ conviction was not legally insufficient. For these
reasons, Hughes’ motion for judgment of acquittal, and its
motion in the alternative for a new trial, are both DENIED.

DATED: SEP 8- 1992

/s/
Wm. Matthew Byrne, Jr.
United States District Judge

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APPENDIX D

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Criminal No. 91-1022 WMB

United States Of America,
Plaintiff,
V.
Hughes Aircraft Co., Inc. and Donald Anthony LaRue,
Defendants.

EXCERPT OF TRANSCRIPT OF PROCEEDINGS
JURY INSTRUCTIONS
JUNE 10, 1992

[18] THE COURT: Now turning, ladies and gentlemen, to
the charges themselves. The indictment in this case arises under
two sections of the United States Code, section 371 and 1001,
and the relevant portions of those sections read as follows:

As to 371, which is the basis for the charge in Count 1:
If two or more persons conspire either to commit an offense
against the United States or to defraud the United States or any
agency thereof in any manner or for the purpose—excuse me.

Counsel, it seems to me there is a typo there. It should
be “for the’—

MR. NEWHOUSE: For any purpose, your Honor

THE COURT: I think that’s right. Let me read it to
you again, ladies and gentlemen.

If two or more persons conspire either to commit an
offense against the United States or defraud the United States
or any agency thereof in any manner or for any purpose and one

30a

or more such persons do an act to effect the object of the
conspiracy, each shall be guilty of an offense against the United
States.

Section 1001 reads: Whoever in any manner within [19]
the jurisdiction of any department or agency of the United
States knowingly and willfully makes any false or fraudulent
statements or representations shall be guilty of an offense
against the United States.

. Defendant, Hughes Aircraft Company, Inc., is a
corporation, and a corporation is a legal entity and it may be
found guilty of a criminal offense.

A corporation, of course, cannot act for itself. It may
act only through its employees who are authorized to act for the
corporation. A corporation is legally responsible for those acts
or omissions of its employees made or performed within the
scope of their employment and with the intent to benefit the
corporation.

To find a corporation defendant guilty, you must find
beyond a reasonable doubt that all the essential elements of the
offenses that are set forth in these instructions, which I'll give
you in a moment, are present as to the corporation in the form
of acts or omissions of its employees who were—excuse
me—acts or omissions of its employees that were performed
within the scope of their employment.

Whether the employees’ acts or omissions were
committed within the scope of their employment is a question
of fact for you. To be acting within his employment, the
employee must first have intended that this act would [20]
produce some benefit to the corporation although that does not
have to be his only intent.

Second, the employee must have been acting within his
authority. An act within the employee’s authority—an act was
within the employee’s authority if it was directly related to the
performance of the type of duties that the employee had the

31a

general authority to perform, judging from his position with the
company, the responsibility previously entrusted to him and the
circumstances surrounding his past conduct. The fact that an
employee is not a high managerial official will not, by itself,
relieve the corporation of responsibility of the employee’s act.

In these instructions, I’m going to be using the terms
“knowingly” and “willfully,” and I’ll define those terms for you
now.

An act or failure to act is done knowingly if done
voluntarily and intentionally and not because of mistake or
accident or other innocent reason.

An act is done willfully if done voluntarily and
intentionally and with the specific intent to do something that
the law forbids, that is to say, with bad purpose to either
disobey or disregard the law.

Now, turning to Count | of the indictment, the
defendants are charged in Count 1 of the indictment with
conspiring to defraud the United States and to make false [21]
statements to the United States in violation of the code sections
I mentioned to you earlier. In order for the defendants to be
found guilty of that charge, the government must prove each of
the following elements beyond a reasonable doubt:

First, that beginning in or about the year of 1985 and
ending in January of 1987, there was an agreement between two
or more persons to commit at least one crime as charged in the
indictment, with all of you agreeing as to which crime;

Second, that Defendant LaRue and Defendant Hughes,
Hughes acting through LaRue, and at least one of the
unindicted co-conspirators, namely, James Temple, Frank Saia,
Margaret Goodearl and/or Marion Tolby, were members of the
conspiracy knowing of at least one of its objects, the objects
being to defraud the United States or to make false statements
to the United States and intending to help accomplish it, with all

32a

of you agreeing which object of the conspiracy the members
intended to accomplish;

And, third, that the existence of the—that during the
existence of the conspiracy, one of the members of the
conspiracy performed at least one of the overt acts set forth in
the indictment for the purpose of carrying out the conspiracy,
with all of you agreeing on the particular overt act that you find
was committed.

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386012_0243%3A2. Public record. Not legal advice.